SEEING STARS: RAIL FRANCHISING AGREEMENTS AND LEGITIMATE EXPECTATIONS

Enfield Borough Council recently sought judicial review of the terms upon which an Invitation to Tender (ITT) was issued for the East Anglia Franchise – London Borough of Enfield v Secretary of State for Transport [2015] EWHC 3758 (Admin) . The franchise includes a hitherto neglected stretch of track from Stratford to Angel Road on the West Anglia mainline to Hertfordshire. This section of line in question is due to be upgraded and stations refurbished as part of the STAR project (a convenient acronym for Stratford to Angel Road). Angel Road is the centrepiece of the development in that it will serve the Meridian Water property development and will be renamed as Meridian Water station to reflect its new purpose; at present the station is little used and has no facilities.

TRAIN SERVICE REQUIREMENTS

The ITT for the East Anglia Franchise was issued by the Department for Transport on 17 September 2015 but the local authority was dismayed to find that it did not contain a minimum Train Service Requirement (TSR) for Angel/Meridian station. The Defendant is empowered to set minimum service requirements by virtue of section 23 of the Railways Act 1993. Given that the station redevelopment is central to their plans for good public transport links to the new development they considered that a TSR was essential. They had assumed that the ITT would include a TSR of 2 trains per hour (2tph) until May 2018 and then 4 trains per hour (4tph) thereafter following completion of the infrastructure upgrade work.

EMAIL EXCHANGES

The Local Authority sought judicial review of the terms upon which the ITT had been issued on the grounds that they had a legitimate expectation that the aforementioned TSR would be included. This claim centred on two emails sent by an official in the Department of Transport. The first email (dated 29 July 2015) had been sent to the secretary of the STAR steering group. The steering group comprises a number of interested parties brought together to promote and manage the STAR project. It includes Enfield BC, Network Rail, Haringey LBC, Transport for London, the GLA and the Department of Transport. The second email was a reply sent by the DoT official to a consultant working for the Council. The Council claimed that email confirmed the TSR in unequivocal terms and was described by a a Council official as ‘providing comfort on 4tph.’

By this time it seems that the Council had spent £70m on the project although must be emphasised that most of this expenditure had already been incurred and was not predicated on the email exchanges at the centre of the dispute. At one point it was claimed that the minutes of a STAR steering group meeting held on 29 May 2014 indicated the defendant’s support of a 4tph service following completion of the development; although this does not appear to have been relied upon in support of the claim.

After the current proceedings were under way the defendant wrote to the Council and stated that it had commissioned a new study into the business case for increasing the frequency of services calling at Angel Road. The conclusion was that, despite the substantial property development, there would not be sufficient demand to merit the TSR desired by the Council.

In short, the Council claimed that the emails from the DoT, especially when read in the light of other emails and evidence, afforded the Council a legitimate expectation that the TSR would be included in the ITT.

LEGITIMATE EXPECTATION

The law on legitimate expectation was summed up by the judge, Mrs Justice Laing, at paragraph 72 of the judgment thus:

‘A public authority may create a legitimate expectation (substantive or procedural) if it makes an unambiguous and unqualified promise on which it is reasonable for the promisee to rely.’

Moreover, a number of authorities were cited to the effect that, even where a prima facie legitimate expectation has been created, it is not necessarily set in stone. The decision maker must be given some leeway to change his mind in the light of overriding public interest considerations or simply to correct miscalculations. The pattern which emerges from the case law is that the courts are slow to find that an irreversible legitimate expectation has been created where the issue has ‘multi-layered effects’ involving ‘wide-ranging issues of general policy.’ [para 75]

As regards the case at hand the judge considered whether the two emails relied upon by the claimant were sufficient to satisfy the aforementioned criteria. As regards the first email of 29 July 2015 the judge regarded it as significant that the Department of Transport official was dealing with a member of the STAR steering group as rather than directly with the Council. She rejected the notion ‘that the Defendant is to be fixed, by some process of ineluctable inference, with knowledge that this email would be transmitted to the Council, still less, that the Council might or would rely on it.’ [para 83]. Moreover, the Council could not ‘legitimately expect’ that they would be given a ‘reliable private insight into the ITT specification’ ahead of its publication [para 84]. In addition, she found that the Council had no reason for believing that the DoT official in question had any authority to make such binding promises regarding the content of the ITT. [para 84]

As regards the second email of 5 August 2015 from the DoT official to the consultant working with the council, the judge noted that there was a note of equivocation in the questions put by the consultant to the DoT. Thus he ‘asked a tentative question “I wonder if you could confirm…” ‘ and whether the DoT ‘could confirm the expected position.’ [para 85] In other words there was an element of seeking an opinion or a belief as opposed to a firm commitment. Once again the judge reiterated the point that the Council had no reason for believing that the DoT official had the requisite expertise or inside knowledge for making such promises. Also, she was confident that all parties knew that the Council’s request for greatly improved services on the line was ‘a huge challenge’. Thus, the Council should have treated any statements regarding the contents of the ITT with circumspection. In conclusion ‘it was unreasonable for the Council to rely on an “informal” email promising this great prize, elicited in the way that it was from the person from whom it was elicited.’

DETRIMENTAL RELIANCE

The judge then turned to the issue of detrimental reliance, an ingredient of legitimate expectation in most cases, and prefaced her findings on this issue by suggesting that the Department of Transport official had ‘got it wrong’ in terms of communicating the official position of the Department of Transport to the various parties involved [para 88]. He may have misunderstood the position or others in the organisation may have failed to make the position clear to him. In any event, the judge asserted that ‘I should be slow to fix the Defendant with the consequences of such a mistake.’ Thus, she would only be prepared to do so if there was clear evidence of the Council having acted to its detriment. On this point she concluded that the Council had in fact taken ‘a calculated risk’ and had already taken certain crucial steps towards the completion of the development ahead of the email correspondence at the heart of the dispute.

PUBLIC INTEREST CONSIDERATIONS

Having decided that no legitimate expectation had not been created in the first place the judge did not deem it necessary to dwell on the issue of whether the Department for Transport had been entitled to depart from it in the light of overriding public interest considerations. She concluded that they would have been entitled to do so given the fact that the scheme in question forms just one small part of the WAML and must be balanced against by the much larger public interest considerations arising therefrom.